The three decades after WWII were a Golden Age for the middle classes in the West, the very heart of our societies, more than often a silent majority, whose expression only materializes during elections. An outstanding example of this era of unrelenting progress is the household car ownership, which quadrupled between 1950 and 1999 in the world. This growth was made possible as assembly plants churned out new cars on an unprecedented scale, in volumes and number of models. 25 million cars were registered in the U.S. in 1950, 67 in 1958. Motorists then crowded the showrooms.
The success story turned sour by the end of the century. Oil shocks pushing the cost of car fuels in the 1970es, deteriorating well-being for the low- and middle-classes, first from rising inflation and unemployment, then from globalization leading to de-industrialization in the West, well-paid jobs in manufacturing giving way to the low wages of the gig economy. Last, but not least, not forgetting more severe regulations regarding safety and environment, which pushed vehicle purchase prices upward.
The 21st century presents a very different landscape than the 1950s and 1960s for the individual mobility ecosystem. Consider these statistics for France in 2023:
- Individual registrations: 5.9 million light-duty vehicles (LDVs),
- Of which 15% were new cars at 0.9 million (another 1 million new cars were registered as corporate),
- Of which 22% were battery electric vehicles (BEVs); 4% plug-in hybrids (PHEVs); 26% non-rechargeable hybrids (HEVs), accruing to a slight majority of electric vehicles (EVs) in new car purchases.
85% of the market is thus second-hand in nature, and there is a clear and positive correlation between the level of revenues and the choice of second-hand vehicles, to a large extent forced by financial considerations. The lower classes (defined as the first five deciles of revenues, the majority in numbers) accounted for more than 90% of second-hand vehicle purchases, the bottom two deciles grabbing three-quarters of this market. Furthermore, the lower classes account for less than one-fifth of new cars acquisition and only one-tenth of EVs. Also note that EVs only represent 1.7% of the second-hand market, in line with the EV share of the car inventory, 1.5%.
With the car pool further aging every year, electromobility pick-up is slow in the car pool, at least as long as the second-hand market does not electrify big time, which may be problematic anyway. The range performance, a key consideration for putative electro-motorists, is in constant improvement for new models, the battery performance evolution with time, if not its repairability, remains a big unknown, the price premium compared to an equivalent thermal engine vehicle remains significant (as EV owners want to cash in on their own constraint when they purchased their new EV).
So, even if range anxiety fades away in the future, even if the price of electricity remains low enough to confirm a lower total cost of operation (TCO) in favor of EV, the purchase price remains the big hurdle for motorists considering to switch to electromobility. In absolute terms, making second-hand the arch-top choice, and in relative terms, with the resilient price premium of EVs vs equivalent internal combustion engine (ICE) models. Within the context of a painstakingly slow decrease of CO2 emissions (-7 % between 2011 and 2023, energy efficiency gains being eaten up by the rise of SUV) and a one-dimensional strategy of CO2 emission reduction through the sole electrification of individual mobility, public support remains essential for the foreseeable future to allow a pace in line with planetary ambitions.
Support can be offered in different guises that are both proactive for EVs and negative to ICE technology:
- Proactive toward EVs, in various forms:
- Reduce the EV-ICEV purchase price premium: direct purchase discounts or low-interest loans;
- Transform car ownership into mobility-as-a-service: preferential rate short-term leases, if
pursued in the long-term; - Eliminate old gas-guzzlers: traditional “cash-for-clunkers” handouts;
- Obtain reduction on paying infrastructures (toll roads and bridges, ferries) or facilities to drive
and park inside city centers; - Promulgate regulations that tend to concentrate support on low-revenue classes to support social justice, and on “small-size” BEVs, locally produced, to favor a social and environmental footprint.
- Negative toward ICE technology that includes:
- Penalties imposed on purchase price for excessive specific emissions of CO2 (and other pollutants) at tailpipe or excessive weight, which concerned more than one-third of new car registrations in 2023 in France;
- Bans and restrictions to drive and park in urban areas (under the banner of air quality improvement) or everywhere, through drastic no-emission regulations, as proposed by the European Commission for 2035.
Cash-strapped motorists favor direct support, which reduces the upfront purchase effort. On the other side of the revenue spectrum, academic models suggest excessive CO2 emission penalties (which trigger threshold drops every year, in France now starting at 117 gCO2/km and which can represent up to 60,000 Euros above 194 gCO2/km) play the largest role for the affluent motorists, those who can afford to spend 50,000 Euros and more on a new car, and will benefit from the moral legitimacy of bona fide fighter against climate change when driving an EV. The penalty acts as a compensation for the EV purchase price premium, significant on larger models, SUV and such, favored by the top classes, which socially just regulations have excluded from the benefit of a purchase incentive (in France, models with a tag price beyond 47,000 Euros).
But the market is heavily slanted toward small- to mid-size cars in Europe. The B segment represents 30% of the pool in France, and the EV premium around 15,000 Euros on this popular segment is only compensated by a reduced TCO when public support is fully taken into account in nine years for a mid-revenue motorist, three years for a low-income one, who rarely considers a new car purchase anyway. Thus, it is a poor return on investment for the heart of the motorist ecosystem, the one that is critical to the mass-market adoption of electromobility. Solutions? Convince motorists to adopt the concept of smaller cars or switch to public transport and soft mobility, huge societal challenges, not supported by populist politicians, or generalize the concept of mobility-as-a-service (short-term leases), a public finances nightmare.
The road to electromobility remains full of sharp curves and potholes, which should impose a slow pace, disallowed by an accelerating climate change. Another solution exists, low-carbon liquid fuels.
Philippe Marchand is a Bioenergy Steering Committee Member of the European Technology and Innovation Platform (ETIP).
